Auctions are often used as a means for selling significant inventories of items held by a seller. For example, a typical manufacturer of vehicles such as a major automobile manufacturer may over time accumulate a large number of excess vehicles, including fleet (ex-rental) vehicles, retail vehicles, company vehicles, off-lease vehicles, and the like. The manufacturer may seek to sell many of these excess vehicles at auction, with the objective of obtaining a fair market value (or otherwise “best price”) for each vehicle sale.
At auction, an auctioneer will typically solicit bids for each vehicle from a group of bidders, and submit the highest bids to the manufacturer for consideration. The manufacturer is generally not obligated to accept any of the offered bids. For example, if the manufacturer determines that the highest bid for a vehicle does not reach what the manufacturer believes to be a fair market value for a particular vehicle at the time of auction, the manufacturer may alternatively elect to sell the vehicle at another time and at another auction.
At each auction, the manufacturer will generally provide a field representative responsible for making a sales decision for each used vehicle that the manufacturer is auctioning. Typically, each vehicle is bid within about 30-45 seconds, after which time the field representative is required to quickly decide whether to “sell” or “no-sell” the vehicle.
In order to assist the representative in quickly reaching a decision, the manufacturer may establish a “floor” or “reserve” price for each vehicle. The reserve price represents the manufacturer's best estimate of a fair market value for the vehicle, and may be used by the manufacturer according to rules of the auction to set a minimum acceptable price for selling the vehicle.
In order to predict fair market value, a number of third-party valuations of vehicles may be available to manufacturers (i.e., so-called “black-book” evaluations). Unfortunately, black-book valuations are often limited in their ability to adjust prices based on the details of features provided in individual vehicles, and are only infrequently updated (for example, quarterly or annually) to reflect historical vehicle selling prices. As a result, floor price predictions using these third-party valuations are often outdated and inaccurate, and present manufacturers with a significant risk of lost revenue as a consequence of sales made below true fair market value.